An Australian Competition and Consumer Commission action against Westfield Shopping Centre Management Co. (Qld) Pty Limited (and associated companies and individuals) alleging unconscionable conduct and misleading conduct has been settled on a without admissions basis.
As part of the settlement, Westfield has paid an agreed amount to former retail tenants of a shop at the Indooroopilly Shopping Centre in Brisbane (formerly managed by Westfield) and has undertaken to the Federal Court of Australia that, in future, it will use a specific release of liability clause when entering into settlement agreements with retail tenants*.
"Westfield has provided an undertaking to the Federal Court of Australia addressing the ACCC's concerns that a condition sought through its solicitors from the former tenants during settlement of private litigation between Westfield and those tenants may have contravened section 51AC** of the Trade Practices Act 1974", ACCC Chairman, Mr Graeme Samuel, said today.
The ACCC began proceedings against Westfield in October 2001 alleging misleading or deceptive conduct and unconscionable conduct in breach of the Act. In particular, the ACCC alleged that Westfield acted unconscionably by making it a condition of the settlement of the private litigation that the former tenants would sign a deed of release containing a certain clause releasing liability. Amongst other things, the clause required that the former tenants not commence, recommence or continue any action in connection with the subject matter of their private litigation, including commencing, recommencing or continuing any administrative or governmental investigation against Westfield (or other parties involved in the private litigation).
The ACCC considered that the condition might have impeded the tenants from approaching or assisting the ACCC in any investigation into Westfield’s conduct.
Westfield acknowledged that the condition may have had the effect of discouraging the tenants from approaching or assisting the ACCC, although this effect was not intended.
The ACCC was concerned that this condition was not reasonably necessary for the protection of Westfield’s legitimate interests in ensuring the finality of the private action between Westfield and the former tenants, and arose in circumstances where there was a significant difference in the relative bargaining strengths of the parties.
"The ACCC considers the matter to be one which raises significant public interest issues", Mr Samuel said.
"The ACCC wanted to ensure it or any other law enforcement agency is not unduly fettered in its investigative functions or inhibited in the performance of its public duties".
"The resolution of this matter provides some clarification for landlords and shopping centre managers about the ACCC's expectations in dealing with tenants. It also preserves the freedom of citizens to co-operate with enforcement agencies and ensures that the public interest is served".
"The ACCC regards as a high priority the prohibitions on unconscionable conduct in Part IVA of the Act. All businesses must be careful not to inappropriately use any power they may have in their dealings with small business. The ACCC is, and will continue to be, a strong enforcer of the law, without fear or favour".
Westfield will contribute to the ACCC’s legal costs.